James Buchanan (1919-2013), Appreciations

Here a number of appreciations and memories of Jim Buchanan. Steve Horwitz has a good, concise summary of some of his intellectual contributions:

Buchanan’s work changed political economy in fundamental ways. Thanks to him and his colleagues, three things are true: No one who wishes to talk responsibly about politics can be ignorant of public choice theory. No one should ever invoke the language of market failure (including externalities) without having digested his work on government failure. And people who run around talking about the constitution better be able to understand something of his contributions to constitutional political economy.

I first encountered Jim when he came to Johns Hopkins to present a seminar paper while I was a graduate student there, in 1967, as I recall. He did not make a good impression on me then. His presentation, like all his work, was nontechnical, and Hopkins specialized in a much more formal, mathematical style of economic analysis. When Professor Bela Belassa asked him a technical question, Jim shrugged it off as if its answer didn’t matter much one way or the other. In the grad students’ minds, this attitude toward the very sorts of things we were agonizingly trying to master suggested that he was a lightweight. In this respect, we could scarcely have been more wrong.

Indeed, the hallmark of Buchanan’s work from beginning to end was a deep seriousness of purpose and procedure that not many economists have matched in the past century. Unlike the typical mainstream economist, Jim was never just fooling around, toying with a tweaked model or a trivial, throw-away idea. To a rare degree, he kept his eyes focused on the prize of true economic understanding.

…. He gave me a deeper understanding of the market process than anyone else had given me. He raised many worthwhile questions that I continue to ponder. He offered me a shining example of the economist as a serious thinker, not simply an idiot savant fooling with models.

Over the years since Dr. Buchanan won the Nobel, much of what he predicted has played out. Government is bigger than ever. Tax revenue has fallen far short of public programs’ needs. Public and private borrowing has become a way of life. Politicians still act in their own interests while espousing the public good, and national deficits have soared into the trillions.

…In a commentary in The New York Times in March 2011, Tyler Cowen, an economics professor at George Mason, said his colleague Dr. Buchanan had accurately forecast that deficit spending for short-term gains would evolve into “a permanent disconnect” between government outlays and revenue.

“We end up institutionalizing irresponsibility in the federal government, the largest and most central institution in our society,” Dr. Cowen wrote. “As we fail to make progress on entitlement reform with each passing year, Professor Buchanan’s essentially moral critique of deficit spending looks more prophetic.”

Buchanan’s Nobel lecture illustrates why, even today, many other economists don’t get Buchanan. While other economists are looking for “efficiency” and “optimality” in models Buchanan had a very different concept of welfare economics.

[Buchanan]…sought to bring all available scientific analysis to bear in helping to resolve the continuing question of social order: How can we live together in peace, prosperity, and harmony, while retaining our liberties as autonomous individuals who can, and must, create our own values?

What made Mr. Buchanan unique as an economist was the length to which he examined and clarified his own sense as a person in order to ensure consistency with his thinking of the world. He was for this a truly honest scholar.

Ray LopezJanuary 10, 2013 at 7:42 am

Dr. Buchanan had no kids; another brilliant mind that confirms the ancient Japanese maxim: “The great man has no seed.”

einsteinJanuary 10, 2013 at 10:48 am

Ray, I had kids! Not that I wanted to, but…

Albert Einstein

Ray LopezJanuary 10, 2013 at 11:27 am

Duh, Einstein. Read what I said. Wikipedia says you had three kids the most famous one being this guy (can you imagine the monkey on his back, being the son of Albert Einstein? No matter what you do they’ll be comparing you to your dad). “Hans Albert Einstein (May 14, 1904 – July 26, 1973) was a Swiss-American engineer and educator, and the second child and first son of Albert Einstein and Mileva Marić. He is best known for his research on sediment transport.”

Steven PressmanJanuary 10, 2013 at 8:28 am

Buchanan and I were not in agreement on many things (see my article “Why Not Public Choice”, the lead article in the Fall 2004 issue of the Journal of Post Keynesian Economics. But more than anyone else, he focused on the main blindspot of Keynes and taught economists that politics can get in the way of good policymaking. It is somewhat ironic that, with all the nonsense going on in Washington, his major insight has never been more relevant. For more on Buchanan and his contributions to economics, see my book Fifty Major Economists (published by Routledge).

RahulJanuary 10, 2013 at 8:29 am

Of all the Nobels in Econ. was he the only one whose work was entirely devoid of mathematics? Did he even ever do an empirical study?

Andrew'January 10, 2013 at 8:35 am

Math and equations are different things. According to Charlie Munger, Warren Buffett has never performed an intrinsic value calculation.

Look at his earlier work on externality, or his later co-authored work (algebraic and geometric treatments, but still math).

Vivian DarkbloomJanuary 10, 2013 at 10:24 am

Ronald Coase, I think.

Ray LopezJanuary 10, 2013 at 11:22 am

Hayek was math-lite I think. “Thus, the highly mathematical and ahistorical turn that academic economics has taken in recent years would have been, for Hayek, as much an abuse of reason as the socialist planning of earlier generations. ” – Bruce Caldwell, “Hayek’s Challenge”

The Other JimJanuary 10, 2013 at 8:48 am

If a man spends his life saying that our level of government deficit spending is immoral — which it is — how can you say he is influential when we are at $16 trillion and counting?

Because a bunch of other economists nod sagely at him?

anonJanuary 10, 2013 at 9:26 am

Ai yi yi.

This is the same kind of juvenile thinking that shouts “There oughta be a law!” in response to every crisis or tragedy.

Troll

DanaJanuary 10, 2013 at 10:42 am

And relatedly, this statement:
“No one who wishes to talk responsibly about politics can be ignorant of public choice theory.”
seems bizarre. How many Americans could provide an accurate definition of public choice theory? I’d think it a tiny number, even among political “elites.” That seems the opposite of influential to me.

DaveJanuary 10, 2013 at 11:21 am

But see Stephen Pressman’s comment above: “he … taught economists that politics can get in the way of good policymaking.”

It is a shame that it took economists so long to recognize something that was quite obvious to any political observer. But that’s why public choice was important–it gave intellectual meat to a common sense idea, forcing those who only saw market-failures to realize that the alternative might not perform any better.

derekJanuary 10, 2013 at 11:26 am

I suspect Buchanan may have had something to say on this, something about politicians and bureaucrats and their hangers on gravitating towards policy prescriptions and theories that support what they want to do. That has probably been the driver for the popularity of Keynesian thinking.

Of course it is ironic that our debt has exploded and deficits have gone out of control not when Keynesians ran policy but when acolytes of Buchanan, i.e. the Reagan administration took over. It was the idea that cutting taxes would starve the beast that is the source of our fiscal nightmare.

anonJanuary 10, 2013 at 9:31 am

+1

Many of my liberal friends were shocked when the payroll tax went back up. Pointing out that the 2% cut that expired was money that went into their pocket rather than into an entitlement program had to be explained at length.

Deficits are merely deferred taxation, and I regularly tell my children and their friends (20s and 30s) that they should be very upset about this. Especially if they have children.

BillJanuary 10, 2013 at 9:51 am

You can see Buchanan’s support of starve the beast, prop 13, and other programs designed to create massive deficits with tax cuts so that we will be hamstrung in the future.

The irony, of course, is that military spending is such a large portion of the discretionary budget–65% of discretionary spending, of the type raised by federal taxes–that conservatives are about to have their hams strung, with military spending and farm price supports benefiting red states on the line.

But why is only “discretionary” spending on the line? This term is a misnomer. It only means that the appropriations have to be authorized each year (well, assuming we’re back in normal land where budgets are actually passed). But process wise, Congress can change non-discretionary spending just as easily as it can change discretionary spending. The real road block is political–lots of people, especially old Republican voters, like their social security and medicare spending. But there are also powerful constituencies that support military spending and farm subsidies. If push comes to shove, I’d say military spending and farm subsidies will be sacrificed first, but it’s not necessarily a loss for Republicans. They might not like it. They may try to stop it, but that’s all they have to do to keep the people back home happy.

Rich BergerJanuary 10, 2013 at 11:44 am

I guess you must have missed the Mediscare tactics (supplemented by hysteria about individual SS accounts after GWB proposed them) that the Dems were using since at least the early 1990’s.

I do agree that military spending has to be looked at closely and farm subsidies should be slashed. I believe that this best policy is to mandate say a 10-20% cut accross the board and let the chips fall where they may. In fact, why not go back to 2007 spending levels when the budget deficit was what roughly $160BN. The Democrat congress came in for 2007 following by the Obamanation and the rest is disaster.

BCJanuary 10, 2013 at 11:53 am

Here is a puzzle: if defense spending is such a large cause of our debt problems, then why do Europeans, who have been able to offload most of their defense spending onto us, face an even larger debt problem, this despite their high tax rates? While it may be tempting to treat non-defense spending as exogenous with respect to defense spending and taxes, the European experience would seem to suggest otherwise, i.e., cuts in defense spending and increases in taxes might actually cause non-defense spending to increase (as a result of political dynamics, not necessarily economic mechanisms although those might play a role too), reducing or even eliminating some of the debt reduction that one might have expected.

GiTJanuary 10, 2013 at 12:56 pm

If military cuts are revenue neutral with the cuts going to social welfare, there’s at least something to be said for spending less money on the collective capacity to kill and destroy things.

Nathan GoldblumJanuary 11, 2013 at 11:15 am

European states do not have as large public debt as the US; only Greece and Ireland have higher debt ratios, and most of the large economies (UK, France, Germany) hover around 4/5 of the American ratio. The Northern countries with their extensive welfare states generally have much lower debt ratios (around 40%-50% of GDP). The European crisis is primarily a growth crisis.

Michael FineJanuary 11, 2013 at 1:16 am

I purchased my first home a year before Prop 13 was passed. We scrapped together all of our assets and managed to get a loan with nearly 40% down (newly weds). If 13 had not passed we could not have stayed in that home, raised our family and built a modest estate. I have witnessed the gross waste and mismanagement ( i.e.$3 billion for stem cell research and another $3-5 billion for the bullet train to nowhere) of California’s revenue by an out of control State legislature and I will not allow the calumny of blaming Prop 13 for he fiscal mess we find ourselves in to go unchallenged. In fact for me and millions of other Californians like me, Howard Jarvis is a hero. We need other such men counter the insatiable tax-a-holics in Sacramento and save what remains of California’s private sector employers.

Brian DonohueJanuary 10, 2013 at 10:23 am

The Great Society was a time bomb. Government spending climbed relentlessly from LBJ through Carter, even as the Pentagon shrank in relative terms.

Reagan was elected in a crisis borne primarily of a 30-year Congressional headlock on Congress. And, in a sense, the ‘starve the beast’ policy worked. Of course, the ship of state takes a long-time to turn around, but government outlays as a % of GDP peaked at 23.5% in 1983, before declining to 21.3% of GDP in 1988, when Reagan left office.

More importantly, tax reform of 1986 set the stage for the late century boom. This was the age of Democratic presidents saying things like “The era of big government is over” and outlays as a % of GDP bottoming out at 18.2% in 2000.

It’s fair to point out, and it may be a critique of Buchanan’s thinking, that the relative decline in government outlays occurred while tax rates were increasing. Hmmm. The point is, for a brief time, we really had moved the debt/policy decisions in this country into a pretty adult conversation, before it all went kablooey under Dubya.

I think ‘starve the beast’ is a legitimate strategy, I just don’t think it applies to the current environment, where half of the voters don’t pay federal incoem tax.

Ray, your own chart does not support your comment. in 1981, Reagan’s first year in office, spending was 22.2% of GDP. In 1988, his last year, it was 21.2%.

Brian DonohueJanuary 10, 2013 at 12:16 pm

But of course, this is not the whole story. Surely you don’t hold Obama responsible for 2009, do you? Of course not. Well, what’s good for the goose is good for the gander. Policy imlications play out over time.

Reagan inherited a mess, like Obama. By the time he left office, the country was on a much better path. He deserves, and gets, a share of the credit for setting the table for the 1990s. He is rightly considered one of the best Presidents we have had in the past century. His strategy was not to win every short-term political argument like some college debater. Obama could do worse than meditate on this example.

/this comment contains zero revisionism

GiTJanuary 10, 2013 at 1:14 pm

Isn’t the fall in spending as a % of GDP an artifact of increased GDP growth? The trend in real federal spending doesn’t really seem like it budges, but real GDP shoots up in the mid 80s. For some reason I can’t find immediate data on the growth rate of federal spending (would be easy enough to do myself, but hey, I’m part of the entitlement generation). A quick look basically shows federal spending staying on the secular trend through Reagan while GDP growth accelerates. From that, *if* Reagan was responsible for decreasing spending as a % of GDP, it would be through spurring economic growth, not reigning in spending.

Rich BergerJanuary 10, 2013 at 1:17 pm

That increased growth in GDP is a nice “artifact” to have. In fact, it would be a nice artifact to have now, but I don’t think it is a priority of the regime.

GiTJanuary 10, 2013 at 1:30 pm

I didn’t say real GDP growth was an artifact – presumably it’s real. The decline in federal spending as a % of GDP is the artifact.

Brian DonohueJanuary 10, 2013 at 1:45 pm

@GiT,

there is a cyclical component to outlays as a % of GDP, so it goes up during recessions and down during recoveries.

I’m talking about the secular trend. in 1966, outlays as a % of GDP were 17.8%. That was the last year the number was below 18%. Between then and Reagan, the rate oscillated with the economy, but trended upward generally to 22.2% by 1981. That’s a 4.4% increase over 26 years (I’m not cherry-picking trough to peak either.) And I’m pretty sure non-defense spending grew much faster- it wasn’t the Pentagon eating up this increase, certainly not in the 1970s.

This is the trend that was arrested in the 1980s. Of course, Reagan splashed on the military, so success in ‘containing’ non-defense spending growth was more marked than is suggested by these numbers.

Score one for ‘starve the beast’.

GiTJanuary 10, 2013 at 8:35 pm

I don’t know, looking at the numbers I’m really not seeing much special about the Reagan years. Absolute spending continues to increase at a decreasing rate, as it had been since like the 50s, until Bush 2. The slowing of the growth in fed spending doesn’t appear to accelerate during the Reagan years.

Rich BergerJanuary 10, 2013 at 11:09 am

I was going to respond to this distortion of history, but I think BD did a pretty good job.

Buchanan had a special meaning for Austrians as I tried to outline in my preliminary appreciation at ThinkMarkets.

Young EconomistJanuary 10, 2013 at 9:54 am

To Tyler, Alex, and All Academic Economists:

Given that today’s academic economics demands its students to be very mathematical, would James Buchanan be accepted into most graduate economics programs (let alone top-notch programs) as a student today?

If not, then how can this attitude in economics departments be changed?

Thanks for your thoughts.

AelisJanuary 10, 2013 at 10:14 am

I am also interested in a response to this question. It touches on a phenomenon that is not unique to the Economics discipline, I believe.

RahulJanuary 10, 2013 at 1:52 pm

What phenomenon is that?

DanaJanuary 10, 2013 at 11:08 am

It is a good question. My own conclusion has been that contemporary practitioners of economics have assigned math skills a high priority as a barrier to entry to the field, and as a way of elevating the profile of the discipline (“Back off pal, we’re scientists!”), so they see it as a positive not a negative development. Many research questions I’ve seen addressed in econ journal articles could be answered by someone who can write decent prose and posses knowledge of basic statistics. Unfortunately, many of these articles fall short on the first count. To busy mastering the more esoteric language of mathematical formulas, I suppose.

DanaJanuary 10, 2013 at 11:10 am

too busy…gotta master that prose…

Ray LopezJanuary 10, 2013 at 12:06 pm

Why not just study the math, and learn it? It can’t be harder than organic chemistry or learning Spanish. Reminds me of tensor notation–I had fits but finally learned it. Or you can try those ready-made statistics packages and I hear Mathematica s/w can even solve many constant coefficient differential equations now, symbolically. Learning math is like learning to skate a perfect figure-8 in ice skating competition: pretty useless for competition but since they grade you on it, you have to do it.

Why does that attitude need to be changed? Maybe Buchnan would still produce his valuable contributions just not from within an Economics Department. Maybe Poli Sci? Maybe a Law School? A Public Policy School?

In any case, what percent of Econ. Nobel Laureates eschewed mathematics? Why let the exceptions dictate the rule?

AelisJanuary 10, 2013 at 10:25 pm

Regarding my earlier post on the “phenomena” it is the phenomena whereby a certain kind of quantitative analysis or structure is privileged in the discipline, even when doing so is a potential distraction from more potent forms of analysis. Or perhaps when the assumptions involved in the modeling process create a cloak over what is properly regarded as pseudoscience.

“However, it does remind us to be aware of the information that is discarded when a social researcher attempts to estimate value, and not to treat such estimates as if they embodied absolute truth. The standard practice, I am afraid, is instead to treat such calculations as if they were fully accurate.”

My fear is not that Buchanan would miss out on the Economics banner over his Nobel Prize; it is that the Economics discipline might lose out on these sorts of insights.

I’ll also add that I don’t see this as an either/or proposition. Mathematical rigor isn’t killing the study of Economics in America.

RahulJanuary 10, 2013 at 11:58 pm

That’s throwing baby out with the bathwater, IMHO. Quantitative analysis doesn’t have to result in pseudoscience. If assumptions are being cloaked, let’s fix that. At some limit of complexity, math isn’t just an alternative; it may be the only good way of modeling things.

Yes, quantitative models are inaccurate, but non-quantitative reasoning can hardly be the fix for that. Good verbal-arguments are better than bad math-models.; but a good math-model is probably better than both.

Buchnan was a great scholar but not because he eschewed math, probably in spite of it.

Young EconomistJanuary 11, 2013 at 6:54 am

Thanks to all for their thoughts, but

a) nobody has answered my first question. Would Buchanan be accepted into most graduate economics programs (let alone top-notch programs) today? I’m not asking about just ANY student who wants to pursue economic studies that are non-mathematical; I’m asking about Buchanan as a student today. Here’s my fear: a student with great potential to think like Buchanan is rejected by most economics graduate programs, becomes discouraged about his/her potential to advance in the field, and subsequently chooses something else entirely different.

b) Rahul and Ray Lopez: I’m not against economics being mathematically driven. I do fear that the field doesn’t care enough about non-mathematical ways to contribute great ideas to economics, especially when it assesses students and non-tenured academics. I still think that economics students should learn the math, but I also think that the field may need to be open to non-mathematical papers from young economists that may turn out to indicate their great potential.

Mr. Donohue mentions the time bomb that was LBJ’s “Great Society.” I’ve always wondered how different this country would look had Barry Goldwater been elected President in 1964. His statement, “I don’t wish to slow the growth of government, I wish to shrink it.” now seems to be an impossibility.

Brian DonohueJanuary 10, 2013 at 11:58 am

The government is like a great running back. You can’t stop him, you just try to contain him.

It seems a poorly written rebuttal. Indeed, it’s really just a straw man post.

ThomasHJanuary 10, 2013 at 12:02 pm

I wish Tyler had been less cryptic about the implications of “No one should ever invoke the language of market failure (including externalities) without having digested his work on government failure.” With the idea of government failure being a rhetorical touchstone of one of our political parties, I feel that “No one should ever invoke the language of government failure without having digested the work on market failures (including externalities.) Considering what Tyler has said about the need for more regulation of finance and climate change, he may even agree.

Ray LopezJanuary 10, 2013 at 12:20 pm

Well it’s a tautology then. If you have to read B to understand A (says TC), while you have to read A to understand B (says you), by definition after reading both A and B you can opine on both–both of you agree. Frankly, I don’t intend to read Buchanan since likely his points are polemical and he’s probably anti-patent. I think the greatest thing the government can do is two things: have an efficient, fast, cheap court system (to settle private transactions–Ronald Coase style with little friction), have a sound, fast patent system, and do basic R&D. So far the government has done precious little in those regards. Except for the creation of the new CAFC (patent) court in 1982, our courts are overcrowded, lawsuits too expensive (hence patents used as bargaining chips precisely due to the high transaction costs of litigation), and R&D is underfunded notwithstanding the helpful Bayh–Dole Act. And the government does not offer prizes for worthy inventions–nor ex post prizes for worthy inventors who don’t profit from their employers since most sign the standard employment contract that waives all compensation (Kary Mullis, inventor of PCR DNA replication, made a few thousand dollars from his breakthrough Nobel prize winning invention; ironically he made a lot more as patent litigation expert).

GilJanuary 10, 2013 at 9:57 pm

In the interest of accuracy, I wish you had noticed that what you attribute to Tyler is from a post by Alex quoting Steve Horwitz.

tomrusJanuary 10, 2013 at 12:12 pm

As the surpluses of the Clinton administration make clear, the current problems of debt and deficit have nothing to do with the inevitability of handouts in a democracy, the forces which Buchanan identified in his shallow analysis of the modern state. Rather they are the direct consequence of the ideology pushed so hard by Buchanan and his colleagues such as Professor Cowen, that taxation is the ultimate public bad with even a default by the US government being the preferred alternative.
As the great British philosopher Jim Royle is wont to say, “Science my ar….

Given that this is about as official a post on the late Jim “Buck” Buchanan, it is as good a venue as any for me to make a few strictly personal observations of this wise and careful scholar.

Mostly I want to comment on the misperception that one finds in at least two of his obituaries. Both in the New York Times and the Washington Post he was described as “cold,” with WaPo going so far as to claim to quote unnamed “admirers” for this observation, even as many of those in comments in various locations have made the opposite claim: that if one got to know him even somewhat he could be reasonably sympathetic and even warm. He did smile. Where then this widely reported misconcepton?

I think I understand it better from something I only learned from reading some of the obits and commentaries (I knew him, but not very well): that while he was raised in rural poverty in Tennessee, his grandfather had served as the governor of Tennessee. As someone who also comes of deep southern genteel stock, I always was aware that an important part of his persona was that he was a genuine southern gentleman of the old school, something that many now neither understand nor appreciate (such a person is likely to be suspected of being a racists hypocrite or worse). But he exhibited the genuine virtues of that breed, including a strong sense of honor and principle, as well as excellent manners and indeed genuine sympathy when someone did communicate with him. The problem was that many feared to do so, perhaps more so as he became older and more prominent. It was not that he was cold; it was that he had reserve, which is another aspect of the old style southern gentleman. People saw that, but especially after he made the 1986 trip to Stockholm (he was there earlier engaging in some translations of Swedish works, although I have seen no mention of this in any commentaries). This reserve along with his prestige made people fearful of approaching him. But as many have recounted, once he was approached, he was perfectly personable and sympathetic, not snobbish at all. In any case, having a southern governor as a grandfather simply reinforced this old school southern gentleman aspect, along with the reserve, although he always retained a certain populist sympathy, and I have heard it bandied about that on more than one occasion he referred to himself, if perhaps mostly jokingly, as “libertarian socialist.”

RahulJanuary 10, 2013 at 5:32 pm

Somehow having a governor grandpa and being”raised in poverty” seemed incongruous to me. Must be a rare example.

prior_approvalJanuary 11, 2013 at 3:19 am

‘Where then this widely reported misconcepton?’

Certainly not from the picture that graced the cover of the GMU Magazine (and who remembers that PRT project these days?) several decades ago.

That picture was a masterpiece in what you are talking about. Though the photographer who took it might have a slightly different recollection, not that it will be shared here.